After declining 40% last fiscal because of Covid-19, revenue of brick and mortar (B&M) apparel retailers will grow 20- 25% on-year this fiscal, driven by strong recovery in demand despite the third wave of the pandemic, said Crisil.

Apparel retailers, which could barely break even last fiscal, should log operating margins of 5-7% this fiscal — compared with about 9% pre-pandemic — backed by improving operating leverage, continued cost rationalisation, and prudent inventory manageme ..

Of these, the top eight apparel retailers, representing a fifth of the sector’s revenue, have seen strong recovery in the first nine months of this fiscal, with revenue growing 55-60% on-year on higher festive and wedding sales.

With retail operations curtailed over the past two years, B&M retailers have augmented their omni-channel presence. Consequently, the share of e-retail sales is seen at 8-9% this fiscal, compared with the pre-pandemic level of 4-5%.

Apparel retailers renegotiated rentals and entered into revenue-sharing agreements after the first wave of the pandemic. They have also limited seasonal collections, leading to inventory rationalisation and lower working capital requirement.